Revolve Q3 2026 Sales Rise 20% as Profit Declines

Revolve Group Inc. (NYSE: RVLV) posted its fourth consecutive quarter of double-digit sales growth in the third quarter of 2026, with revenue rising 20% year over year to $356.0 million. However, higher spending on growth initiatives, a narrower gross margin and a prior-year insurance recovery contributed to lower earnings.

Net income fell 27% to $15.5 million from $21.2 million, while net income attributable to Revolve Group stockholders declined 32% to $14.5 million. Diluted earnings per share were $0.20, compared with $0.29 a year earlier. The Q3 2025 result included a $4.5 million insurance recovery, equivalent to $3.4 million after tax or $0.05 per share.

Adjusted EBITDA, a non-GAAP measure, decreased 7% to $23.5 million from $25.3 million. Adjusted EBITDA margin contracted to 6.6% from 8.6%, reflecting increased investment in initiatives intended to support long-term growth. GAAP operating income declined 9% to $19.0 million, and operating margin fell to 5.3% from 7.1%.

Growth across segments and geographies

Both of Revolve’s business segments generated at least 20% sales growth. The REVOLVE segment increased net sales 20% to $306.8 million, accounting for 86% of total revenue. FWRD sales also rose 20%, reaching $49.2 million.

REVOLVE segment gross profit increased 19% to $170.6 million, representing about 56% of segment sales. FWRD gross profit rose 15% to $21.2 million, with its gross margin declining to 43% from 45% in the prior-year quarter.

Growth was similarly broad by geography. U.S. net sales advanced 20% to $277.4 million, while international sales increased 22% to $78.6 million. International markets represented 22% of quarterly revenue.

Customer and order growth supported the sales increase. Active customers rose 18% year over year to 3.24 million, the company’s strongest growth rate for that metric in three and a half years. The active-customer count increased by a record 202,000 sequentially during the quarter. Total orders placed grew 19% to 2.75 million.

Average order value declined 5% to $292. Revolve attributed the decrease primarily to initial sales of GrowGood beauty products, which carry substantially lower price points.

Margins reflect sales mix and investment

Gross margin narrowed by 75 basis points to 53.9%. The company said the decline primarily reflected a lower proportion of full-price sales and higher inventory valuation adjustments, partly offset by a greater mix of owned-brand sales. The comparison followed a 347-basis-point gross-margin increase in Q3 2025.

Marketing expense increased to 14.3% of sales from 13.7%, mainly due to spending on growth initiatives such as the new REVOLVE Los Angeles label. Selling and distribution costs rose to 17.8% of sales from 17.5% as higher shipping rates more than offset the benefit of a lower product-return rate.

Fulfillment expense edged up to 3.4% of sales from 3.3%, reflecting higher labor costs, partly offset by fewer returns. General and administrative expense remained near 13.0% of sales as revenue growth counterbalanced investment in physical retail and GrowGood beauty products developed with Cardi B.

Cash flow and strategic initiatives

Cash generation remained positive for the first nine months of 2026 but decreased substantially. Net cash provided by operating activities was $16.9 million, down from $69.6 million in the comparable 2025 period, while free cash flow fell to $7.0 million from $59.0 million. Revolve said movements in working capital primarily drove both declines.

Inventory totaled $293 million at quarter-end, up 23% year over year. The gap between sales growth and inventory growth improved to negative 2 percentage points from negative 12 points in the second quarter. Cash and cash equivalents, net, stood at $285 million, down approximately $31 million from a year earlier. During the first nine months, Revolve made $14.5 million of minority investments and repurchased $10.0 million of stock.

The company is continuing to invest in brand expansion, physical retail and new product categories. Recent developments included an expanded partnership with Kendall Jenner, who became FWRD’s global creative director and a REVOLVE Los Angeles ambassador, and the appointment of Dwyane Wade as chief performance officer for REVOLVE Man and FWRD Man.

Revolve also launched an annual print and digital magazine, announced a joint venture with Donatella Versace to create a beauty and fashion business, and disclosed plans for its first permanent Florida store at Aventura Mall near Miami.

The presentation identified economic conditions, consumer demand, tariffs, inflation, supply-chain constraints, geopolitical tensions, competition and the cost of acquiring customers and merchandise as potential risks. Revolve also noted that its results can fluctuate because of seasonality and changes in demand, while its expansion initiatives require spending that may affect near-term profitability and cash generation.